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Soundings

Steven Malanga
Greedy Hospitals
In the wake of September 11, the Empire State’s hospitals are up to old tricks.
Winter 2002

New York’s hospitals are tireless lobbyists for ever greater government subsidies, so it’s no surprise that they’ve shamelessly tried to capitalize on September 11 by chasing after hundreds of millions of dollars in government aid.

Though the terrorist attack didn’t overburden the city’s emergency rooms, just three weeks later the hospitals rushed out a cobbled-together “study” claiming that it had cost them a staggering $340 million. Included in this huge sum was $200 million in projected losses—that is, losses not directly related to September 11 but that the hospitals anticipated because of a terror-intensified slowdown in the New York economy. The hospitals argued that the feds should pony up for this expected revenue shortfall and—as is frequent with their pleas of this sort—they warned of dire consequences to the city’s health-care system if the government didn’t come up with the cash. Fortunately, federal legislators, as a rule much less friendly to New York hospitals than local politicians tend to be, met the industry’s entreaties with incredulity.

But the hospitals are relentless, so just a few weeks after their first request went nowhere, industry lobbyists issued a second report, this one estimating that the hospitals needed nearly $1 billion to get ready to deal with bio-terrorism and other terrorist threats. This study was even flimsier than its predecessor. Offering few details about how the hospitals had arrived at such a big price tag, it mostly rehashed old complaints about how federal cutbacks have gutted hospital resources. Privately, though, public health officials suggested that better communication and coordination, not a huge boost in funds, could best solve most of the readiness problems that the hospitals described.

Even some of the industry’s biggest supporters seemed embarrassed by the audacity of these requests. New York’s hospital-friendly U.S. senators, Hillary Clinton and Charles Schumer, only sought $140 million for hospitals in the federal aid package for Gotham, the amount of direct losses the institutions claimed from September 11. The $140 million total was included in the bailout legislation that passed in Washington this past December.

Despite the hospitals’ lobbying setbacks, it’s too soon to count them out. In the months ahead, they’ll warn of an impending health-care crisis and pressure politicians by feeding stories to the press about looming layoffs. Those stories in turn will all fail to note that New York’s hospitals have done little to downsize and consolidate, even though medical advances enable doctors to treat more people as outpatients and shorten hospital stays. They will also ignore the giant subsidies that the hospitals already rake in, including yet a further $9 billion that the state’s Health Care Reform Act of 2000 gave to the health-care system over four years.

The Bush administration should prepare for this onslaught and view any further requests from the hospitals skeptically. The administration should instead use federal auditors to verify the hospitals’ claims before releasing any further funds. U.S. taxpayers shouldn’t have to pick up the tab for the Empire State’s out-of-control health-care profligacy.

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